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The deadline for the fourth advance tax payment was March 15, 2025. Missing it incurs penalties under Sections 234B and 234C. Senior citizens without business income are exempt.
The deadline for the fourth advance tax payment was March 15, 2025.
Advance Tax Payments: The deadline for the fourth instalment of advance tax payment ended on March 15, 2025. Taxpayers who miss the advance tax deadline will incur penalties Advance tax is a system where taxpayers estimate their current income and pay taxes in instalments throughout the financial year if their tax liability exceeds a certain limit.
This ‘Pay as you Earn’ scheme applies to individuals with an estimated tax liability of Rs. 10,000 or more. However, senior citizens (60 years or older) with no business or professional income are exempt.
What Are Penalties If You Miss the Advance Tax Deadline?
If a taxpayer misses the advance tax deadline, said Sofiya Syed, Direct Tax Division at Dewan P N Chopra & Co, they are liable to pay simple interest at 1% per month under Section 234C for short payment or non-payment of advance tax instalments by the due date.
Additionally, she added, if the taxpayer fails to pay at least 90% of the total tax liability by the end of the financial year (i.e., March 31), they will incur simple interest at 1% per month or part of a month under Section 234B.
Niyati Shah, Vertical Head, Personal Tax at 1 Finance added that a substantial tax liability at the time of filing may increase the likelihood of scrutiny, especially for high-value transactions.
Interest Is levied As Follows:
| Due Date of Instalment | % of Advance Tax Payable | Minimum Advance Tax Payable | Interest Payable u/s 234C | |||
| On or before 15th June | 15% | 12% | 1% x 3 months x shortfall in advance tax | |||
| On or before 15th September | 45% | 36% | 1% x 3 months x shortfall in advance tax | |||
| On or before 15th December | 75% | 75% | 1% x 3 months x shortfall in advance tax | |||
| On or before 15th March | 100% | 100% | 1% x 1 month x shortfall in advance tax | |||
Is there any way to reduce or avoid additional penalties if someone has missed the deadline?
Niyati Shah said taxpayers should pay any outstanding tax at the earliest to reduce interest under Sections 234B and 234C to minimise penalties. “In certain cases, they may also apply for a waiver of interest, provided they have a valid and reasonable justification, subject to approval by the tax authorities,” she added.
Niyati explained that paying a lump sum before March 31, 2025 can help avoid interest under Section 234B, as it ensures that 90% of the total tax liability is paid before the financial year ends.
However, interest will still apply for the period between the missed instalment deadline and the actual payment date.
Sofiya Syed said that if a taxpayer misses the advance tax deadline, they cannot fully avoid interest under Sections 234B and 234C, but certain steps can help minimise the liability:
Since interest under section 234B is levied at 1% per month or part thereof after March 31, paying the outstanding tax amount promptly can reduce the interest liability.
• Paying self-assessment tax under Section 140A before filing the income tax return (ITR) can further limit interest under Section 234B.
• Ensuring correct TDS deductions and timely payment of future advance tax instalments can help avoid future interest under Sections 234B and 234C.
• Though interest under Sections 234B and 234C is mandatory, however, in cases of genuine hardship or reasonable cause, taxpayers may apply for a waiver or reduction of interest to the Assessing Officer (AO) under Section 119(2)(a).
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